Small businesses that don’t sell to the federal government are missing out on a $100 billion opportunity. The U.S. government is the world’s largest buyer, and it has a stated policy of awarding at least 23% of government contracts to small businesses.
Not sure whether the product or service that your firm sells will be required by the federal government? Don’t worry, it’s easy to find out. All you have to do is to visit the Federal Business Opportunities website (FedBizOpps.gov). Use the search function to discover the goods and services that are in demand. There is a “place of performance” filter that allows you to narrow your search to the state in which you operate.
The Advantages of Getting Government Contracts
A small business can suffer from various constraints. You may not have a big marketing budget or the ability to deploy significant amounts to promote your company. But there is one area where you do have an advantage. The federal government is keen to do business with you.
Look at the contracting data published in the Small business procurement scorecard overview:
As you can see, there is a large volume of government contracts that are up for grabs. If you can gain access to even a very tiny portion of this business, your firm could see a spike in revenues and profitability.
There are other benefits as well. Once you make a beginning, working on government contracts could become a regular feature. You could establish long-term relationships and ensure a steady stream of revenue for yourself. Successfully executing government contracts could help you to build your reputation and bag additional work from other sources, including large companies.
Here’s Where You Can Find Government Contracts
Many small business owners are reluctant to bid for government contracts. They think that it’s difficult to find opportunities that are a good match for their company. In fact, a significant number of entrepreneurs are unwilling to even make a start.
But adopting an attitude like this could hamper your growth. While it’s true that dealing with the government is different from entering into a commercial transaction, the basic principles are the same. You should be in a position to supply a high-quality product or provide a service that meets the buyer’s requirements.
Here are several ways in which you can make a start in finding the right business opportunity for your company:
Federal Business Opportunities – The FedBizOps website provides details of all federal government contracts that are valued at more than $25,000. It also contains archived records that can give you an idea of the type of contracts that are awarded.
The advanced search function on the website can be handy for identifying opportunities for your business.
Contracting Opportunity Finder – This government website allows you to search for jobs by keyword, location, and posted date. Contracting opportunity finder also provides a filter that lets you identify jobs that have been “set-aside” for various categories of small businesses including:
- Women owned small and/or economically disadvantaged business
- Emerging small business
- Veteran-owned small business
Apply directly to an individual agency -You have the option of trying to get government contracts directly from one of the many federal agencies that post opportunities for small businesses.
This USA.gov webpage can direct you to the Office of Small and Disadvantaged Business Utilization (OSDBU) or the Office of Small Business Programs (OSBP) that can help your company to compete for business opportunities. You can find details for selling to the military and various Federal Agencies here. Your list of prospective customers includes:
- Department of the Air Force
- Department of Defense (DOD)
- Department of the Navy
- National Guard
- Department of Commerce
- Department of Justice
- Environmental Protection Agency
Follow This Step-by-Step Process
Before you begin applying for government contracts, there are three requirements that you need to meet:
Step 1. You must get a DUNS number. DUNS stands for “data universal numbering system.” It is a unique number for your company and will help the federal government access your details.
What if your company does not have a DUNS number? You can get a DUNS number by requesting one. It is provided free. If you make a request for your number on the phone by calling the D&B Government Customer Response Center on 1-866-705-5711, it will be provided immediately. However, if you request your DUNS number by completing the webform, the process could take 1-2 business days.
Step 2. You will also need your NAICS code. This refers to the North American Industry Classification System, a standard used by the federal government to determine the classification under which your business falls. Remember that if your company operates in more than one area, you could have multiple NAICS codes.
Step 3. You need to complete your System for Award Management (SAM) Registration. It is essential to complete your SAM registration to be allowed to work as a federal contractor.
In other words, you will not be permitted to apply to work as a federal contractor unless you complete this registration.
How long does the registration process take? If you complete the procedure correctly, it will take only a few days. This time is required to verify the information that you have provided with the IRS and Dun & Bradstreet.
Completing your SAM registration confers several advantages on your small business:
- It allows you to apply for federal government contracts.
- You can update your preferred payment method during the registration process. If you opt for payments through electronic transfers, it will ensure that the amounts due to you are sent directly to your bank account.
- Your small business will appear on the government search list. When procurement officers are looking for companies that they can consider for awarding government contracts to, your firm will have a better chance of being shortlisted.
In fact, according to GovSpend, an official website that allows businesses to search through a database of government purchase orders, SAM is the primary resource use by procurement officers from the federal, state, and local governments to identify vendors for government contracts.
When you complete these three preliminary steps, you should see if your business is eligible for preferential treatment:
Set-Aside Contracts for Small Businesses
The good news for small firms like yours is that the federal government limits the competition for specific categories of government contracts. It does this to support small businesses to increase their revenues.
Most government contracts under $150,000 are “set-aside” for small businesses.
How do you know whether your firm qualifies as a small business? This is decided on the basis of SBA size standards. The U.S. Small Business Administration (SBA), a United States government agency tasked with supporting small businesses and entrepreneurs, determines these size standards based on the industry that you operate in, your revenues, and the number of employees working in your company.
You can use this Size Standards Tool to determine if you qualify as a small business for government contracts.
Still Confused? Here’s What You Can Do
The SBA Learning Center has an excellent training program titled Government Contracting 101. This three-part program is the perfect way to understand how government procurement works.
For additional help, you can contact your Procurement Center Representative. These individuals will help you to win government contracts. They often have access to government procurement programs before they are formally announced.
The Bottom Line
What is the deciding factor in being awarded a government contract? Most agencies are looking for successful past performance. So, if you have several similar contracts under your belt, you stand a greater chance of being selected.
When you are bidding for your first contract, it is advisable to be patient. It could be months before you get a response to your application. You may also be asked to provide further information as well as make an oral presentation to explain how you propose to accomplish the work.
Remember, persistence pays. Reply as comprehensively as you can to the questions you are asked. And if you win, make sure that you do the best job you possibly can. This will help to build your reputation and could give you an advantage for subsequent bids.
Do you want regular inputs on the best ways to run your business? Join our community of over 30,000 entrepreneurs and subscribe to our newsletter to receive an email every week on topics that range from business funding, management, and technology, to specific tips on maximizing your profits.